Home / Business / Accountability, transparency vital in mining sector

Accountability, transparency vital in mining sector

Exploitation of Marange diamonds did not translate into expected development

Exploitation of Marange diamonds did not translate into expected development

Tinashe Makichi Mining Matrix
The discovery of diamonds in Marange brought hope to the nation.

Revenue from the diamond sector was anticipated to restore macro-economic stability and general social and economic development for the nation as a whole.

However, the exploitation of Marange diamonds did not translate into expected development as budget deficits continued to be perennial, social spending dwindled while industrial sector productivity continued to decline.

Research done by various civil society organisations, the academia and other stakeholders confirmed that the country lost potential resources for development from the diamond sector despite the fact that the companies made huge profits.

Organisations like the Zimbabwe Coalition on Debt and Development have continually advocated for domestic resources mobilisation as opposed to unsustainable and unpredictable borrowing from International Financial Institutions and other bilateral lenders who set conditions that end up hurting ordinary citizens.

ZIMCODD has consistently bemoaned the inaction by Government to address this economic injustice.

Revenue losses from the formal system have had negative consequences on social and economic development.

“When government fails to curb resources leakages, the rights holders are deprived of their socio-economic rights as the government fails to provide social services to the citizens.

“Revenue leakages entail limited spending on social services such as health, education and industry support by government,” said ZIMCODD.

The lost resources could have been invested in social service and economic development that Zimbabweans so desperately need.

To meet these demands, there is heavy reliance on donors, a situation which has proven to be unsustainable. It is common knowledge that if the available resources are managed effectively the proceeds can also be channelled towards infrastructure development.

Going forward, to curb these illicit financial flows, there is need to improve on the legal and institutional frameworks that relate to public finance management and natural resources governance to enhance transparency and accountability.

The country has lost a lot of potential resources for development from the extractive sector through IFFs and this has impacted negatively on social and economic development and the general well-being of the country. Against this back drop, it is advisable that Government must urgently set up a commission of inquiry to establish how potential revenue is being lost in the extractive sector.

There is need to reform and strengthen the legal and institutional frameworks that govern public finance management and natural resources.

This entails finalising on the Mines and Minerals amendment Bill which is still pending, realigning the Public Finance Management Act among other relevant pieces of legislation

To enhance transparency and accountability in the extractives industry, there is need to make contract negotiation and the signed contracts more open to public scrutiny. Parliamentary oversight role on public finance management issues and natural resources governance should be improved and constitutional provisions should be made enforceable.

In addition there should also be fiscal transparency in terms of publicly disclosing financial statements by mining companies.

Going forward Government needs to conduct a geological survey to determine current quality and quantities of the mineral resources before mortgaging resources without the true value of the resources.

Government needs to take action towards reforming institutional and legal frameworks in order to curb IFF. There is need to limit the number of revenue collecting institutions in the mining sector.

Currently, there are too many revenue collecting agents involved thereby making it difficult to trace where exactly there are revenue leakages.

Follow Herald Business on Twitter @H_BusinessZim

Source :

herald

Check Also

NetOne market share grows 1,4 pc

Michael Tome STATE-OWNED mobile network operator, NetOne, registered a 1,4 percent growth in the active …